The electric utility industry, already an economic colossus, is poised to double in size in the next two decades. Technological change will get the credit.

There is an accelerated rush within electric utilities to get more sophisticated about managing innovation and opportunities enabled by new technologies. As such, electric utilities are moving rapidly to define new processes to better manage the four forces that drive innovation (critical price, critical mass, displacement, and near zero cost), which impact their generation, wholesale marketing, transmission, distribution, and retail marketing business.

Let me explain the four forces of innovation, since they play a significant role in the trends and selection of the technologies to go after for the new electric utilities being built.

“Critical Price” is often a psychological barrier threshold. A drop below a certain price triggers a larger adoption of the technology. Achieving this force establishes a real market for the technology.

“Critical Mass” is normally reached when you go from reading about a technology to knowing people that actually use it.

“Displacement,” which usually follows the first two innovation drivers, occurs when technology on the way up hits one on the way down doing significantly more for about the same price.

“Near Zero Cost” leads to ubiquity of the technology as it reaches all target markets; new products, services, and markets are built on top of its original ubiquity and dominance.

These innovation forces are morphing the vertically integrated electric utility model of the past into new models that leverage key core competencies. And it is the ability of the new electric utilities to understand and manage their core competencies along with the new business models enabled by technology advances that will double the size of this industry within the next 20 years and re-make many new electric utilities into end-to-end service providers of the future.

The new electric utilities of the future are already being built today at a very high pace in North America and Europe. Many of these utilities have realized that information technology innovation alone can drive their transformation towards new customer satisfaction, reliability, and financial stability levels never achieved before. Driven by this reality, the new electric utilities have empowered the CIO and team to play a central role in helping lead the execution of the new business models.

Some of the best examples of this change include utilities doing the following:

-Deploying service oriented architectures to connect seamlessly geographic information systems, work management systems, outage management systems, design tools, distribution & planning analysis systems, contract management systems, customer information systems, financial systems, payroll systems, asset management systems and inventory management systems to fully automate the delivery of energy to customers. Driving this effort is the need to eliminate the historical silos that built non-connected solutions with too many single points of failure and higher maintenance costs. This trend presents the utility with the opportunity to realize operational savings in the order of 20 percent. Managers will make decisions based on real-time information delivered via portals and monitor key performance indicators for the rest of the work force.

-Installing lower cost and improved sensors managed via wireless that make power plants and grids reach almost zero downtime. Imagine a fleet of monitoring and controlling sensors across the entire grid communicating real-time with SCADA, distribution automation tools, and materials management tools. The need to track the performance of every device that impacts the reliability of service together with predictive analytics software and data warehousing technology presents a unique opportunity to finally leverage telemetry in this industry. This effort can help reach up to 25 percent savings in maintenance costs while almost eliminating downtime.

-Moving to 64-bit computing that enables the horsepower needed to crunch real-time optimization models that drive distributed control systems to waste near zero fuel. This breakthrough is now reality. Lots of work has been going on here in the past by many key vendors, but the new computing capabilities of Intel 64-bit processors enable utility managers to more precisely develop predictive optimization models. The opportunities are many here, but saving fuel should be the primary target. This trend alone can save a typical utility 10 to 15 percent in annual fuel costs.

-New energy generation systems, some using renewable resources, and new energy storage technologies will open the door to new approaches to distributed generation. Through distributed generation, new renewable and energy storage solutions can help reduce transmission and distribution costs trying to balance the grid. The capital cost savings for a service area of 200,000 customers can be in the order of $10 million per year.

-Risk management trading systems powered by grid computing for market making opportunities needed to settle the buy and sell transactions of the new grids with distributed generation. More and more wholesale trading operations will need to offer sustainable prices to their retail energy partners by adopting risk-trading practices that help flatten fuel price spikes for longer periods of time. They will also need to offer a market making safe heaven to those new distributed generation entrants that want to sell their extra energy to the grid. Electric utilities leveraging this trend will see their margins climb 5 to 10 percent on an annual basis while eliminating any downside risk for themselves and ensuring greater customer satisfaction from the partners and end-customers.

-Wireless broadband service area solutions that enable a paperless utility to offer its customers new energy management services. Utilities will place AMR meters across the entire service area and capture sufficient data to offer new and revolutionary pricing programs and services. Some energy companies will rethink their demand-side management programs, leveraging the same wireless broadband infrastructure to control HVAC thermostats, pools, Jacuzzis, spas, refrigerators, water heaters, and other smart large appliances. New smart appliances will talk to an energy management gateway device and software at the premise level via wireless standards, enabling the utility to track and manage the energy consumption remotely. The benefits of this are enormous. Some utilities driving this trend are reaching 10 percent increases in net profit margins – and superb customer satisfaction index levels.

- A self-service centric philosophy enabled by collaborative computing (online interactive access, email, VOIP, instant messaging, video-mail, etc) and wireless broadband and/or broadband over power line coverage for devices and personnel across the service area changes the way customers interact with their services and how they view the service that they get from their new utilities.

All these trends and changes taking place are just the beginning of a total transformation that the electric utility industry will go through within the next 20 years. Just like the automotive, aerospace, computer and telecommunications industries have gone from many players to few, from vertically integrated and proprietary-based solutions to horizontally driven and open standards-based solutions, so will the electric utility industry. Imagine what comes after having built an infrastructure that is built on open standards and completely connected via networks (wired and wireless) and monitored and controlled by software. Imagine where you can take your brand if you are already offering services to each and every customer with the exact price, quality and service that matches their need profiles anytime and anywhere within your service area or target market. All these changes are beginning to take place now and the technology that will speed this profound revolution is in development.

However, the real challenges to the electric utilities go well beyond comprehending the scope of technological change on the horizon. Energy companies must develop the business models to make the new service offerings affordable and profitable. They must have the right change management programs to be successful and competitive. All these new change management programs evolve around new governance decision models, new planning strategies, new quality programs, new portfolio management standards and methodologies, new program management activities, new project management standards, and new risk management initiatives all driven by the objective of achieving robust customer satisfaction and other key performance indicators. The new electric utilities are agile, they are customer friendly, and they are coming to your neighborhood real soon.

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Andres Carvallo BIO

Andres Carvallo is an award winning engineer, speaker, author, and executive. Andres is globally recognized by the IEEE as one of the early developers of the smart grid concept and technology. Andres championed Austin Energy's industry leading smart grid program design and implementation from 2003 – 2010 and he architected the Pecan Street Project in 2009. Andres co-authored the best selling book "The Advanced Smart Grid", has received 34 industry awards since 2005, and is a popular speaker and guest lecturer. Andres is currently the EVP of Energy Solutions and Chief Strategy Officer at Proximetry. Andres has over 27 years of experience in the Energy, Telecommunications, Computer and Software industries. Andres has held since 1992 P&L responsibilities and senior executive titles while being responsible for the strategy, development, and commercialization of over 40 products at six start-ups and leading global companies like Philips Electronics, Digital Equipment, and Borland. Furthermore, Andres started his career as a product manager for Microsoft Windows in Redmond, WA.

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How to Run IT as a Business?

It all starts with my focus on the customer as the center of the lifecycle. The Lifecycle rules a discovery, planning, and maturity model process that orchestrates a framework. The framework, called RunITbiz, is made out of the 12 critical elements for Running IT as a Business. The elements are rationalized into demand and supply modules. At the core of the RunITbiz framework is a Service Oriented Architecture that leverages all legacy systems while powering new systems built on new open standards (Web Services, XML, BPEL, etc) including cutting edge Web 2.0 tools (Blogs, Wikis, AJAX, RSS, etc).

My RunITbiz Framework has two main modules. One module focuses on Managing IT Demand as a Business and the second one on Managing IT Supply as a Business. Each module has six critical elements to master. Here are the modules and critical elements:

Running IT Supply As A Business: 7. Enterprise Architecture, 8. Vendor Management, 9. Process Management, 10. Project Management, 11. Service Management, 12. Quality ManagementI wish you great success in your transformation. And if you have any questions, don't hesitate to reply to any post in this blog or contact me.

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Top 20 Geek Blogs

1) Lifehacker - http://www.lifehacker.com/ - Lifehackers' motto says it all: "Don't live to geek, geek to live." This blog offers timesavers of just about every stripe, from Firefox shortcuts to tips from the "Getting things done" faithful.

2) IT Toolbox Blogs - http://blogs.ittoolbox.com/ - IT Toolbox has a number of "in the trenches" IT pros who talk about technology and management issues. There are specialist blogs dealing with security, databases and project management, among other subjects. It's a versatile site.

3) Valleywag - http://valleywag.com/ - Bring in the noise, bring in the snark. Valleywag is for those who believe that the tech industry lives or dies by the scuttlebutt pinging around Silicon Valley. And it's amusing for those of us who prefer that the lotus-eaters of Northern California stick with the dishing and tongue-wagging, leaving the rest of us to get the real work done.

4) Kotaku - http://kotaku.com/ - Kotaku is the snarky, gamer uber-blog. It has everything from reviews and gossip to cheat tips. Just about anything you'll ever need, including which game to buy and how to play it.

5) Danger Room - http://blog.wired.com/defense/ - Wired's military and defense blog writes about some of the coolest and scariest military technologies -- not to mention scandals, debates and other military news. Lots of video and imagery are included.

6) Gizmodo - http://gizmodo.com/ - Gizmodo's got the scoop on all the latest toys and cool and wacky inventions -- from high-def TVs and coffee makers to booze belts and USB drives. You've got to love a site that publishes photos of a solar-powered bathing suit. Yeah, they also blog about serious technology news too.

8) Techdirt - http://www.techdirt.com/ - Techdirt is a newsy, "tell it like it is" blog that frequently features debates on the hot issues in the Internet and computer fields. Scandals are a specialty. Simplicity is its hallmark.

9) Groklaw - http://www.groklaw.net/ - Groklaw's raison d'etre is needling SCO in its long-running patent fights against IBM and Novell, but the discussion sometimes veers toward other issues that involve technology, intellectual property, and government regulations.

10) Hack a Day - http://www.hackaday.com/ - Want to learn how to add USB to a cheap Linux router? Create a snake robot? How about an XBox 360 laptop? Hack a Day has these basement projects and many more. This site is for the serious techie. At the same time, it's good for a laugh or a new hobby.

11) Engadget - http://www.engadget.com/ - As Coke is to Pepsi, so Engadget is to Gizmodo. It's all about gear, gossip, techish issues and the occasional rant. It's got great product photos, and the editors have access to pre- and early-release gadgetry. Also, some really funny home-made junk. But we prefer Gizmodo.

12) Feedster - www.feedster.com/feedpapers/Technology - Like drinking from the hose. This Web page brings together blog sites about technology, sports, celebrity gossip, food, personal experiences -- you name it. It also offers a blog search feature that allows you to input words or phrases, and it has a very cool RSS aggregator for news feeds. It also injects some great humor into technology news. An all-around great site.

13) Forever Geek - http://forevergeek.com - Forever Geek is a great site with a myriad blogs on diverse topics, from technology and general interest news to movie and game reviews. Definitely a geek paradise. If you want to learn about the upcoming Iron Man movie or read a review of Photoshop CS3, this is the place to go.

15) Smorgasbord - http://www.smorgasbord.net/ - Billed as a site for gadget- and game-loving geeks, this blog also serves up articles that cross over into the political and celebrity news of the day. The combination of entertainment value and tech news make Smorgasbord a top contender.

16) The Unofficial Apple Weblog (TUAW) - http://www.tuaw.com/ - TUAW offers collection of independent bloggers -- that is independent but not undecided or uninformed. It's a good source for Apple-related news. The only reason it didn't make the top 15 was its singular topic focus.

17) Elliot Back's blog - http://elliottback.com/wp/ - A self-professed computer scientist, Elliot posts everything from his opinions on why XML sucks, to the Titanic's passenger list and reviews of movies like 300. This site is diverse and well composed, offering great tips on topics such as increasing system performance and blocking spam.

18) Ed Foster's Gripelog - http://www.gripe2ed.com/scoop/ - There is a new crop of blogs that highlight poor customer service for consumer electronics, bad UIs and outright rip-offs, but Ed Foster has been doing it longer than anyone else. Check out these recent topics: Defective DRM, tricky warranties on plasma TVs and bad mobile phone service.

19) Gadgetell - http://www.gadgetell.com/ - This is a great site if you want to get the latest gadget and game news along with some topical opinion pieces.

20) 4sysops - http://4sysops.com/ - This is a very useful with well-written tips and how-to's for Windows admins.

About Proximetry

Proximetry develops and commercializes AirSync™, a comprehensive communications network and device management software platform for the energy industry. AirSync delivers secure, scalable, closed-loop control, and policy-based management of devices to build and manage large complex networks built upon multiple vendor platforms that incorporate a vast array of communications technologies. AirSync™ provides the essential tools for energy organizations to provision and manage mission-critical devices and networks. Founded in 2005, Proximetry is privately held, headquartered in San Diego, California, and backed by Munich Venture Partners, Aeris Capital, Investec, and Rembrandt Venture Partners. For more information, please visit www.proximetry.com

Siemens on Proximetry

"The challenge to monitor, control, and manage millions of communicating grid devices from multiple vendors continues to grow dramatically as grid modernization drives usage of a few thousand devices to tens of millions,” said Thierry Godart, president of Siemens Smart Grid Division North America. “Our partnership with Proximetry will allow utilities to better manage this vast proliferation of information and make strides in improving grid reliability.”

Itron on Proximetry

"We believe that Cisco and Proximetry’s joint work to integrate dynamic performance management across multiple network technologies is great evidence that the Connected Grid Ecosystem continues to mature positively. Our common vision of a truly open, interoperable suite of offerings that build off of each other will be a success for utilities and consumers alike. It’s not more of the same,” said Simon Pontin, Chief Technology Officer at Itron.

Cisco on Proximetry

“Cisco is pleased to be working with Proximetry and the AirSync solution, which complements the Connected Grid Field Area Network solution with enhanced RF management capabilities. As a key member of the Connected Grid ecosystem in the Cisco Developer Network, AirSync extends the visibility in the Field Area Network GridBlocks with unique performance management capabilities”, said Jennifer Lin, Sr. Director of Product Marketing from Cisco’s Connected Energy Networks BU.

Why is AirSync Better?

1) ALL other NMS/OSS products in the market use only SNMP to provide monitoring and alarms for devices, AirSync supports SNMP and it also uses a lightweight protocol (pre-CoAP) to manage devices with closed-loop control and policy-based functionality via an agent. AirSync’s pre-CoAP protocol solves the disadvantages of SNMP for the Smart Grid (i.e. too chatty, non-stop polling, and no integrated firmware management).

2) All other NMS/OSS products are focused on telecom WAN management only (i.e. routers, switches in telco domain) while AirSync can manage the WAN and its elements, it also can go deeper into the FAN, LAN, and PAN (including the AMI network). Furthermore, AirSync manages all devices hanging on those networks(e.g. electric/gas/water meters, inverters, IDEs, RTUs, Programmable Logic Controllers, premise gateways, premise routers, and sensors in general). It is important to note that All other NMS/OSS products in the market do not manage smart meters and/or any sensors on the edge of a FAN, LAN, or PAN, but AirSync does.

3) All other NMS/OSS products in the market do NOT provide any firmware management capabilities or if they do it is very limited. And they DO NOT support FANs, LANs, and PANs. And they DO NOT provide closed-loop control of any edge devices from any vendor on any network using any topology. AirSync delivers all of the above.

4) AirSync has unique features to manage ALL networks with many configurable enhancements like shaping the traffic and QoS management by having an agent on the device side unlike All other NMS/OSS products in the market which depend only on SNMP and lack such an ability.

Bottom line: All other NMS/OSS products in the market deliver only classical and limited WAN NMS/OSS capabilities. AirSync delivers all that far better and it can also support FAN/LAN/PAN/device/firmware management functions and help manage deeper into all the networks. AirSync has a well-defined NBI that can be used to interface with any NMS/OSS and provide the utility with an integrated management system with the utility's preferred GUI but with all the advantages of AirSync.

Bottom line: All other NMS/OSS products in the market deliver only classical and limited WAN NMS/OSS capabilities. AirSync delivers all that far better and it can also support FAN/LAN/PAN/device/firmware management functions and help manage deeper into all the networks. AirSync has a well-defined NBI that can be used to interface with any NMS/OSS and provide the utility with an integrated management system with the utility's preferred GUI but with all the advantages of AirSync.